“OCTO Insight Radar Observatory”
As we stand at the threshold of a significant shift toward electric vehicles (EVs), the automotive industry is experiencing remarkable growth and transformation. In this evolving landscape, innovative strategies such as long-term rental programs are proving to be pivotal in accelerating the adoption of EVs and enhancing market dynamics. These initiatives not only facilitate access to the latest electric vehicle technologies but also streamline consumer adoption by reducing upfront costs and providing flexible mobility solutions.
By 2030, projections indicate that the European EV fleet is poised to expand exponentially, reaching a staggering 40 million vehicles compared to the current 8 million on the roads. This surge underscores the urgent need for scalable and sustainable strategies to support the burgeoning EV ecosystem. Addressing affordability and price volatility concerns is crucial to sustaining this momentum, and rental programs offer a viable solution.
A departure from traditional ownership models of the consumer market addresses a flexible and cost-effective alternative. By circumventing upfront costs and providing transparent financial frameworks, rental programs empower individuals to embrace electric mobility without financial constraints.
Furthermore, the rise of rental agreements for EVs heralds a shift in the automotive business model, from ‘ownership’ to ‘usership’. Giving users’ access to not only mobility, but upgraded features through the Software Defined Vehicle (SDV) as and when they need it. Beyond mere transactions, rental programs emphasize service-oriented solutions, fostering enduring relationships with customers.
This customer-centric approach not only cultivates loyalty but also promotes sustainability by prolonging the lifecycle of EVs through efficient utilization. With shared mobility paradigms, resources are better optimised through collaborative consumption, enabling multiple users to access a single vehicle over its lifecycle. Shared mobility models also enhance urban mobility and alleviate congestion by replacing on average 22 private cars for every shared car, contributing to overall transportation efficiency.
The synergy between rental programs and regulatory incentives is also accelerating the shift towards sustainable transport solutions. European Union policies, like those in the Clean Mobility Package, encourage innovative mobility solutions and ensure that regulatory measures are harmonized with market developments. These incentives enable rental services to broaden EV accessibility and help meet environmental targets.
While all these trends are taking place at a different pace in different geographies, the challenge to reach net-zero emissions is a global phenomenon.
As revealed by the latest report from ANIASA, an Italian association representing rental companies, there’s an increasing popularity for the rent a car model. The market has seen significant growth, with 30% of new car registrations in Italy joining rental fleets, adding to the 1.3 million strong fleet made up of passenger cars and light commercial vehicles. Notably, green vehicles are increasing in popularity with pure EVs representing33% and plug-in hybrids 53% of the new rentals.
The choice to rent brings increased flexibility and convenience, and can often be a more cost-effective way to access the latest vehicles. Renting removes many of the ownership pain-points such as maintenance and depreciation, and in some cases it can also include insurance and even access to EV charging.
|The short-term rental sector also showed positive indicators in 2023, with revenue approaching €1.5 billion and about 4.3 million rentals (+18%) totalling 36 million rental days (+14%).
The rental growth trend is also apparent across Europe, with revenues generated from vehicle leasing reaching US$94 billion in 2023, representing a 5% growth compared to the same period a year ago.
Significant growth and transformation is particularly within EVs entering major rentals fleets. This shift is partly driven by stringent environmental regulations and growing consumer preference for green travel options with companies. Many have announced substantial investments in EVs, planning to electrify up to 90% of their fleet by 2030.
In North America, revenues from vehicle leasing reached US$55 billion in 2023, a 4% growth compared to the previous year. While the growth trend for adopting pure EVs has had some recent setbacks, the future adoption is supported by the technological advancements and the availability of more EV models suitable for the high-utilization demands of rental operations.
Similar to Europe, there is a growing consumer preference in North America for renting electric and hybrid vehicles as part of a broader shift towards sustainable and environmentally friendly travel options. In both regions, the rental market’s shift towards electrification is aligning with broader automotive industry trends towards sustainability. This is driven by consumer preferences for greener travel options, regulatory push, and the increasing economic viability of operating EVs in high-turnover environments like car rentals. In fact on a global scale, EVs grew 35% between 2022 and 2023, reaching over US$35 billion in leasing revenues.
As electric vehicles (EVs) become more prevalent, significant advancements in battery technology, charging infrastructure, and vehicle-to-grid (V2G) systems are enhancing how we use and interact with these eco-friendly alternatives. The rise of connected vehicles has been central to these developments, streamlining interactions among everyone involved in mobility services—from car renters to service providers, enabling the flexible, contactless and responsive services used today. Connected vehicles improve user experiences by making it easier to access shared or rental cars and providing enhanced services like breakdown and emergency assistance. For rental operators, they benefit from invaluable access to remotely manage and maintain their fleet, making smarter decisions that reduce operational costs and improve overall service efficiency. For those who have made the transition to EVs, strategic use and placement of charging stations is now more data-driven and can be tailored to where and when they are needed most.
In the wider ecosystem, these fleets must operate across urban environments that are subject to heavy sustainability pressures, relying on key technological advancements in this area is geofencing. This GPS-based technology restricts traffic zones to only electric and hybrid vehicles, ensuring that hybrids operate in zero-emission mode within these areas. Major automotive brands have been pioneering this approach, including:
Ford has integrated a geofencing solution into its Transit hybrid plug-in.
BMW has implemented geofencing mainly in the United Kingdom.
Stellantis has been experimenting with geofencing technologies at the Turin Geofencing Lab.
At the core of these initiatives is the V2X (Vehicle-to-Infrastructure) system, which boosts communication between vehicles and urban infrastructures, enhancing the interaction of plug-in hybrid electric vehicles (PHEVs) with city environments to promote sustainable urban mobility.
In conclusion, innovative rental solutions, which often leverage these technological advancements, are crucial to the EV revolution. They offer an affordable, flexible, and sustainable way to access mobility, shaping a greener and more inclusive future for the automotive industry. As the sector evolves, these rental programs are poised to play a significant role in defining the mobility landscape, opening new opportunities for growth, sustainability, and accessibility.
Authors: Tina Martino, Andrew Lee – OCTO
Sources:
Frost & Sullivan, Global Vehicle Leasing Outlook 2023
ciht.org.uk/news/can-sharing-reduce- the-number-of-cars-on-british-roads/